Shareholder Protection

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For many business owners, running a company is a time consuming and complex affair. Attention is rarely paid to what might happen if a shareholder dies, or becomes seriously ill.

In the interests of financial security, business stability, and continuity - particularly for private limited companies where there may only be a small number of principal shareholders - it is essential to provide a safety net following the loss of a shareholder:

Shares may go to the deceased’s family, who may have little interest in the business and would prefer a cash sum

The other shareholders may want to retain control by buying lost shares - but may not have the resources to do so

The shares may be taken over by someone who does not share the company’s objectives - and may even be a competitor

The correct Insurance Policy allows for sufficient funds to be available in the event of the death or specified critical illness of a shareholder. This ensures that the company can continue to operate unhindered while the outgoing shareholder or their family receive fair compensation.

It provides documentation to enable the surviving shareholders to receive the funds free of tax under current legislation (as at 2018/19).

Benefits for shareholders

In the event of a shareholder’s death or specified critical illness, one of the most important things to your business is to ensure continuity. Shareholder Protection sets out the procedures and policies to help ensure that you retain control, and have the necessary funds to do so:

Arrange for the most appropriate transfer of shares to surviving shareholders, or the company, at a fair commercial price

Set up insurance policies to provide the funds to purchase the shares

Avoid having to draw on funds set aside for other purposes

Prevent the sale of shares to hostile parties, or competitors

Documentation to enable all transactions to be made tax-efficiently

Help maintain business stability and continuity

Help retain confidence of employees and customers

The plan will have no cash in value at any time, and will cease at the end of the term. If premiums are not maintained, then cover will lapse.

The policy may not cover all definitions of a critical illness. For definitions of illnesses covered please refer to the key features and policy documents.

Information regarding taxation levels and basis of reliefs are dependent on current legislation and individual circumstances, are not guaranteed and may be subject to change.

As many as one in ten small energy suppliers in the UK might not get through the winter, after they have struggled to pay their green taxes.

Giles Warren Financial Ltd is registered in England & Wales no. 5205163. Giles Warren Financial Ltd is authorised and regulated by the Financial Conduct Authority no.305375. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK.

Should you have cause to complain, and you are not satisfied with our response to your complaint, you may be able to refer it to the Financial Ombudsman Service, which can be contacted as follows: The Financial Ombudsman Service, Exchange Tower, London, E14 9SR, http://www.financial-ombudsman.org.uk